“We really see this as being a huge, important addendum to our economic activity and growth in the future,” said Glick. “We’re highly dependent on tourism and defense. We see energy being a much bigger, growing sector. Our renewable energy agenda really pushes us in that direction, basically a home-grown industry.”

Being so dependent on oil, Hawaii’s economy is at the mercy of global geopolitical events. When oil prices shot up in 2008, “over $1 billion left our economy, with no value added whatsoever,” said Glick.

In addition to solar, Hawaii is blessed with every form of renewable energy. Wind, geothermal, and solid waste together provide 10 percent of power, with more from biomass and hydro. The Big Island is already 40 percent renewable.

The island of Kauai is especially aggressive on solar. The national Solar Electric Power Association (SEPA) recently named David Bissell, CEO of Kauai Island Utility Cooperative (KIUC), as the Utility CEO of the Year. Bissell has helped Kauai become a “laboratory for innovation in engineering and utility finance” in pursuing utility-scale solar projects.

The community-owned utility has a goal of 50 percent renewable power by 2023. It has been actively adapting its system to work with more renewables and less oil. Kauai has wireless smart meters for nearly all of its 33,000 customers, online customer usage data, and utility-scale battery systems to provide more reliability and smooth out fluctuations. These batteries have prevented blackouts when oil-fired generators have tripped offline.

To reach its renewables goals, the utility is building more small hydro systems, a biomass power plant, and interconnecting more solar -- including over 600 small solar systems in the past two years and 30 megawatts from three big projects now under construction. When these projects are done in 2014, Kauai will meet half its daytime power demand from the sun. With so much solar coming, the utility is thinking of “offering rates to encourage customers to use electricity during the day, when power is being produced more cheaply,” such as for charging electric cars.

Growing Pressure for Change

Kauai is in the vanguard of a global trend toward the greater use of solar power, as documented in America’s Power Plan, a recent report from the Energy Foundation. Regions like Germany, Spain and California are seeing disruptions to their traditional electricity markets, regulations and business models. As solar becomes competitive with grid power, more customers are producing their own, eroding utility profits. And an abundance of daytime solar power is driving down wholesale prices and shifting peak demand to early evening, changing the operations and revenues of generators.

The report calls for reforms to regulations and business practices to facilitate the transition to more renewables, such as by making sure electricity rates reflect the costs and benefits of solar, cover the cost of maintaining the grid and encourage efficiency.

Hawaiian Electric is pursuing more renewables, but the Public Utility Commission is also forcing it to innovate with new utility business models that can adapt to changing times. In a recent case, the PUC issued an extraordinary statement that “the HECO Companies appear to lack movement to a sustainable business model to address technological advancements and increasing customer expectations.”

“Electric customers are increasingly frustrated because of high electric rates,” the commissioners wrote. “The commission affirms its commitment and support of Hawaii's clean energy transformation. However, clean energy in and of itself is not the singular goal but rather should be viewed as one strategy to serve the public interest, along with sound business practices centered on customer value.”

“The utility of the future is one that will use innovative technology to provide cost-effective service and value to customers,” added Commissioner Akiba. “That means renewables, storage, electric vehicles, and demand-side management tools. It doesn’t have to be a threat to utilities, if they would just embrace it.”

In the long run, the state energy office says Hawaii has the potential to produce more than 140 percent of current power demand from renewables. Geothermal energy on the volcanically active Big Island would be the backbone, supplemented by wind, solar and biomass plants across all the islands. To integrate the system, Hawaii has begun planning for an inter-island undersea power cable, the first to link the islands.

Existing oil-fired power plants will be maintained to ensure reliability, but with renewables rising, they will use dramatically less oil. Hawaii is finding ways to turn off the tap, tune in to its natural resources, and turn on the lights with renewable power.

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2 Comments

How is adding new duplicative generation capacity of the highest LCOE source (PV solar) that has not and cannot replace a single fossil fuel generation plant affected prices? How has running fossil fuel plants in terribly inefficient ways (spinning reserve, contingency reserve) to backup and buffer solar power affected electricity prices? How has subsidizing this folly with tax breaks affected prices? How has setting an absurd goal of 40% of electricity from INTERMITTENT renewable generation sources by 2030 (it rains in Hawaii several times a day) affected prices since it was enacted in 2009? How has needlessly creating the need for new distribution grid capacity affected prices? How is creating a new state regulatory agency (HERA) to manage this saturation affecting prices? The answer is that all these have contributed to increasing prices not reducing them. In this case the cure is worse than the disease. Hawaii has only exacerbated their problem by trying to cure it with PV solar (and worse, biomass and biofuels). They and California and Germany and Denmark and Spain and the UK are the lemmings racing over the cliff. We should watch and learn, but not follow.

ANONYMOUS
February 20, 2014

Hawaii is a useful laboratory for tropical islands but is irrelevant in terms of the continental United States. Its at 21 degrees north versus the continental U.S. at 45 degrees north. It has no seasons. As a result there is not a massive swing in seasonal energy demand nor a massive variation in solar input. The other factor is that the historical energy source is oil--one very expensive way to make electricity.

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Our nation’s electricity system is undergoing a rapid transformation. Market forces, driven by public demand for cleaner, more efficient energy, and technological innovation are redefining America’s power sector. These trends will change...